Low Premiums, High Deductibles, Higher Risks: The Health Plan Gamble

Alison Mitisek was at a Denver pediatrician’s office with her 15-month-old son last August when she passed out. The doctor’s office staff called an ambulance, which rushed her to a nearby emergency department.

Doctors were not able to determine why Mitisek, a 30-year-old schoolteacher, lost consciousness. Still, the bills for the ambulance and the diagnostic testing and other care came to $5,800. Mitisek’s group health plan had a $5,600 annual deductible, on which she and her husband Mark had already paid $800. Their share of the $5,800 bill before their insurance kicked in was $4,800.

In general, the higher a health plan’s deductible, the lower the premium. “Taking that gamble is appealing,” Mark Mitisek says of the choice to pay lower premiums and hope to avoid needing pricey medical care. “But when you lose the gamble and you’re stuck with that expense, it makes you think twice.”

“People get caught all the time,” says Martin Rosen, co-founder of Health Advocate, a company that helps consumers resolve medical billing problems and provides support for health-care decisions. “If you come from a traditional health plan and you paid a flat $100 co-pay for a visit to the emergency room, the assumption is that you’re going to pay the same in a high-deductible plan.”

In a high-deductible plan, preventive care is typically not subject to the deductible. But all other care, including prescription drugs and emergency care, may be.

During this year’s annual enrollment season, more people than ever will have the option to choose a health plan with a deductible that may exceed $1,000. These plans are often also linked to a savings account that offers tax benefits; employers and the employee may contribute to these accounts to help cover medical expenses.

Fifty-nine percent of employers offered so-called account-based health plans this year, up from 53 percent in 2011, and 11 percent said they will begin offering them by next year, according to an annual employer survey conducted by benefits consultant Towers Watson and the National Business Group on Health.

Some employees don’t have a choice: Twelve percent of employers who responded to the survey said account-based plans are the only type of plan they offer. A analysis from the Kaiser Family Foundation found that the annual average deductible in these plans for a single person rose from $1,715 in 2006 to $2,086 this year. (KHN is an editorially independent project of the Kaiser Family Foundation.)

“When people are considering a high-deductible plan, I always say, ‘Could you come up with the whole deductible all at one time?'” says Amelia Haviland, an associate professor of statistics and health policy at Carnegie Mellon University who has published studies on the effect of high-deductible health plans on health-care spending. “If it’s going to keep you from going to the emergency department when you really need to go, don’t choose that plan.”

Families that enrolled in a high-deductible health plan spent 14 percent less on care, on average, than families in traditional plans, according to a Rand study of claims data for 53 large employers published in the American Journal of Managed Care that was co-authored by Haviland in 2011.

Proponents of high-deductible health plans say that requiring consumers to pay a larger share of their own health-care costs helps reduce spending on unnecessary care. But the Rand study and others have found that when people have to pay more out of pocket for their care, they also skimp on care they need, such as preventive cancer screenings.

The emergency department is one of the most expensive places to receive care, and reducing its overuse is an important goal of high-deductible plans.

In 2010, the average total charge for a privately insured person who was treated at an emergency department and released was $2,183, according to the 2010 Nationwide Emergency Department Sample, a database sponsored by the federal Agency for Healthcare Research and Quality.

According to one study, people who had a high-deductible plan through a Massachusetts insurer had 15.7 percent fewer emergency department visits over two years than those enrolled in a traditional plan from the same insurer. The most significant difference was in visits for problems that weren’t high in severity.

It’s not always easy to know at the outset whether a problem is severe, say some experts.

“The public deserves the benefit of a full medical evaluation to determine if it’s indigestion or a heart attack,” says Michael Granovsky, a member of the American College of Emergency Physicians.

In the aftermath of the bills from her emergency department visit, Alison Mitisek and her son have switched to a plan with a lower deductible offered through Alison’s job. Her family has also worked out a payment plan with the hospital to pay off Alison’s bill; Mark Mitisek estimates this will take six to eight months.

“Like most people, we’re living pretty much paycheck to paycheck,” he says. “It doesn’t seem like there’s a whole lot of benefit to having a high-deductible plan.”

The idea is that you put some $$ away each month and HAVE that deductable if you need it. If you don’t end up needing it, the money is yours to keep, not wasted on higher montlhy premiums that you never see. You have to put the money aside and save it for emergency